Identifier
Created
Classification
Origin
08ASHGABAT76
2008-01-15 11:56:00
UNCLASSIFIED//FOR OFFICIAL USE ONLY
Embassy Ashgabat
Cable title:
TURKMENISTAN: NO MORE SUBSIDIZED GASOLINE?
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UNCLAS ASHGABAT 000076
SIPDIS
SENSITIVE
SIPDIS
STATE FOR SCA/CEN, EEB
STATE PLEASE PASS TO USTDA DAN STEIN
COMMERCE FOR HUEPER
ENERGY FOR EKIMOFF/THOMPSON
E.O. 12958: N/A
TAGS: PGOV ENRG EPET TX
SUBJECT: TURKMENISTAN: NO MORE SUBSIDIZED GASOLINE?
UNCLAS ASHGABAT 000076
SIPDIS
SENSITIVE
SIPDIS
STATE FOR SCA/CEN, EEB
STATE PLEASE PASS TO USTDA DAN STEIN
COMMERCE FOR HUEPER
ENERGY FOR EKIMOFF/THOMPSON
E.O. 12958: N/A
TAGS: PGOV ENRG EPET TX
SUBJECT: TURKMENISTAN: NO MORE SUBSIDIZED GASOLINE?
1. (U) Sensitive but unclassified. Not for public Internet.
2. (SBU) SUMMARY: During the president's first cabinet meeting
this year on January 11, the Government decided to establish a
quota-based fuel-distribution mechanism. Under this plan,
Turkmenistan nationals will be given a certain volume of gasoline
and diesel free of charge, while any additional fuel will be sold at
"domestic commercial prices." The Government has not so far
announced whether foreign entities will get quotas. The new system
supposedly will be implemented gradually, but no kick-off date has
been given. While it is unclear whether the new measure is
motivated by the need to cut consumption and/or a decision to begin
phasing out subsidies, general perception is that it will have yet
another negative impact on the already-high rate of inflation in the
country. END SUMMARY.
THE NEW QUOTAS
3. (U) According to a plan announced during President
Berdimuhamedov's first cabinet meeting of the year on January 11,
Turkmenistan nationals owning vehicles with a total weight of up to
3.5 tons will be entitled to 120 liters of gasoline a month free of
charge. Owners of heavier trucks, buses, and diesel-run vehicles
will be entitled to 200 liters of fuel free. Excess volumes will be
charged at what Deputy Cabinet Chairman for Gas and Oil Tachberdi
Tagiyev described as the "domestic commercial price." Such a price
has not been announced, if it has even yet been determined. Rumors
are circulating that the price could be anywhere from 2,500 manat
(or around 12 cents at the current commercial rate of 20,000 manat
to the dollar) to 20,000 manat per liter ($1).
DEPUTY CHAIRMAN TAGIYEV'S "PROPOSAL"
4. (U) The January 11 Turkmenistani official news program showed
Tagiyev making this potentially very unpopular proposal to the
President, who in turn accepted it. Tagiyev said he reached the
decision to suggest the quota system after talking to Turkmenistani
petroleum sector experts. However, the newscaster stated that the
measure had come from an earlier tasker by the president.
5. (U) Tagiyev did not explain the rationale for switching to the
new arrangement, nor did he provide any timeline for implementing
it. The president instructed implementers to phase in the program
and to use best international practices.
6. (SBU) COMMENT: It is unclear whether the motivation for the
quota system is conservation, or a decision to phase out gasoline
subsidies and begin moving toward a more commercial pricing system,
or both. However, the higher fuel prices will likely further boost
inflation and are already provoking negative comments on the
streets. International financial institution representatives have
expressed concern that, when taken together with ongoing efforts to
unify the currency exchange rates, the authorities may be trying to
introduce too many changes too quickly and with insufficient
planning. We also wonder what kind of new bureaucracy will be
needed to keep track of who gets how much vehicle fuel. END
COMMENT.
HOAGLAND
SIPDIS
SENSITIVE
SIPDIS
STATE FOR SCA/CEN, EEB
STATE PLEASE PASS TO USTDA DAN STEIN
COMMERCE FOR HUEPER
ENERGY FOR EKIMOFF/THOMPSON
E.O. 12958: N/A
TAGS: PGOV ENRG EPET TX
SUBJECT: TURKMENISTAN: NO MORE SUBSIDIZED GASOLINE?
1. (U) Sensitive but unclassified. Not for public Internet.
2. (SBU) SUMMARY: During the president's first cabinet meeting
this year on January 11, the Government decided to establish a
quota-based fuel-distribution mechanism. Under this plan,
Turkmenistan nationals will be given a certain volume of gasoline
and diesel free of charge, while any additional fuel will be sold at
"domestic commercial prices." The Government has not so far
announced whether foreign entities will get quotas. The new system
supposedly will be implemented gradually, but no kick-off date has
been given. While it is unclear whether the new measure is
motivated by the need to cut consumption and/or a decision to begin
phasing out subsidies, general perception is that it will have yet
another negative impact on the already-high rate of inflation in the
country. END SUMMARY.
THE NEW QUOTAS
3. (U) According to a plan announced during President
Berdimuhamedov's first cabinet meeting of the year on January 11,
Turkmenistan nationals owning vehicles with a total weight of up to
3.5 tons will be entitled to 120 liters of gasoline a month free of
charge. Owners of heavier trucks, buses, and diesel-run vehicles
will be entitled to 200 liters of fuel free. Excess volumes will be
charged at what Deputy Cabinet Chairman for Gas and Oil Tachberdi
Tagiyev described as the "domestic commercial price." Such a price
has not been announced, if it has even yet been determined. Rumors
are circulating that the price could be anywhere from 2,500 manat
(or around 12 cents at the current commercial rate of 20,000 manat
to the dollar) to 20,000 manat per liter ($1).
DEPUTY CHAIRMAN TAGIYEV'S "PROPOSAL"
4. (U) The January 11 Turkmenistani official news program showed
Tagiyev making this potentially very unpopular proposal to the
President, who in turn accepted it. Tagiyev said he reached the
decision to suggest the quota system after talking to Turkmenistani
petroleum sector experts. However, the newscaster stated that the
measure had come from an earlier tasker by the president.
5. (U) Tagiyev did not explain the rationale for switching to the
new arrangement, nor did he provide any timeline for implementing
it. The president instructed implementers to phase in the program
and to use best international practices.
6. (SBU) COMMENT: It is unclear whether the motivation for the
quota system is conservation, or a decision to phase out gasoline
subsidies and begin moving toward a more commercial pricing system,
or both. However, the higher fuel prices will likely further boost
inflation and are already provoking negative comments on the
streets. International financial institution representatives have
expressed concern that, when taken together with ongoing efforts to
unify the currency exchange rates, the authorities may be trying to
introduce too many changes too quickly and with insufficient
planning. We also wonder what kind of new bureaucracy will be
needed to keep track of who gets how much vehicle fuel. END
COMMENT.
HOAGLAND